Correlation Between C29 Metals and Resource Base

Can any of the company-specific risk be diversified away by investing in both C29 Metals and Resource Base at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining C29 Metals and Resource Base into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between C29 Metals and Resource Base, you can compare the effects of market volatilities on C29 Metals and Resource Base and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in C29 Metals with a short position of Resource Base. Check out your portfolio center. Please also check ongoing floating volatility patterns of C29 Metals and Resource Base.

Diversification Opportunities for C29 Metals and Resource Base

0.56

Correlation Coefficient

C29 Metals  Resource Base

Very weak diversification

The 3 months correlation between C29 and Resource is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding C29 Metals and Resource Base in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resource Base and C29 Metals is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on C29 Metals are associated (or correlated) with Resource Base. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resource Base has no effect on the direction of C29 Metals i.e., C29 Metals and Resource Base go up and down completely randomly.

Pair Corralation between C29 Metals and Resource Base

Assuming the 90 days trading horizon C29 Metals is expected to generate 1.3 times more return on investment than Resource Base. However, C29 Metals is 1.3 times more volatile than Resource Base. It trades about 0.09 of its potential returns per unit of risk. Resource Base is currently generating about 0.07 per unit of risk. If you would invest  7.40  in C29 Metals on August 31, 2024 and sell it today you would earn a total of  1.90  from holding C29 Metals or generate 25.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

C29 Metals  vs.  Resource Base

C29 Metals

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in C29 Metals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, C29 Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Resource Base

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Resource Base are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Resource Base unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with C29 Metals and Resource Base

The main advantage of trading using opposite C29 Metals and Resource Base positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if C29 Metals position performs unexpectedly, Resource Base can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Resource Base will offset losses from the drop in Resource Base's long position.

The idea behind C29 Metals and Resource Base pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.